The headline — Illinois’ pension woes are far worse than state admits — has been the case for at least fifteen years. Wirepoints included a link to this article by Jim Dey in their email newsletter today and included this below the link:
Comment: The assessment by the actuary reported in this article is contained in his guest article we published here.
Regular readers of this website already know the point I’ll make posting this: Too bad Illinois Republicans and conservatives don’t know how to make more of their fellow citizens aware of this simple reality.
Here is the opening of Jim Dey’s article:
Everyone in Illinois who’s paying attention — not close to a majority — knows the state’s public pensions are in horrendous shape. The most common estimate is the pensions for teachers, state employees, judges, legislators and university employees are underfunded by $134 billion-plus and growing.
That’s bad. Suppose it was even worse, so bad it would be a relief if it was only $134 billion?
Mitchell Serota, a Ph.D. and Fellow of the Society of Actuaries, contends the under funding is “closer to $250 billion.”
“That’s a quarter of a TRILLION dollars,” he writes.
Further, Serota relates an anecdote in which he states a budget expert who frequently cites the $134 billion figure actually agrees with him.
Serota recently attended a town hall meeting to hear guest speaker Ralph Martire of the Center for Tax and Budget Accountability. An advocate of Gov. J.B. Pritzker’s proposed progressive tax-hike amendment to the Illinois Constitution, Martire argues that giving legislators flexibility to impose rising levels of taxation on rising levels of income is necessary to rescue public pensions.
Because Serota rejects Martire’s position, he posed a question to shed light on the issue.
“I asked Mr. Martire if he was aware that if Illinois were a private corporation subject to the requirements of corporate accounting (rather than the more lax public accounting requirements), the pension plans would be required to use a discount rate close to 4 percent rather than the 6.75 percent to 7.25 percent that they are using currently. He replied that yes, he was aware, but that doing so would render the budget requirements for funding the pension plans untenable,” Serota wrote in an article about the exchange.
Read more: The News-Gazette
Image credit: ILNews.org.